### THEATTOWNEY GENERAL Q3FTEXAS

HonorableTed Butler Opinion No. M- 676 Criminal DistrictAttorney Bexar County Re: Do the installersand San Antonio, Texas operators of the city's skyride hold a taxable leasehold interest in real property or a mere operating agreement or Dear Mr. Butler: license not taxable?

We have receivedyour request for an opinion on the captioned subject fromwhich we quote as follows:

"Aquestion has arisen as to the tax status of an elevated skyride located on certain city-ownedproperty known as HemisFairwithin the Civic Center Urban Renewal Project No. 

### 5, City of San Antonio, which is operatedby a Concessionaireas a sight-seeingand entertainment ride for the public at a patronage chargeper ride fromwhich the City is paid compensation in an amount equal to a percentage of gross annual receipts agreed upon by written contractbetween the parties.
"Youropinion is respectfully sought on the following question:
"Doesthe use, operationand maintenance of the elevated skyrideas more fully described below constitutea leasehold interestwhich is taxable by the State of Texas, and the County of Bexar, underArticle 

### 7173>Vernon's Civil Statutes?
"Pursuantto a contract executed on 

### 18 October, 

### 1966,Austin Hemphill and Billy J. McCombs, hereinafter referred to as 'Hemphill-McCombsP, in conjunctionwith Aerial Transportation, Inc., hereinafter referred to as sConcessionaires,

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agreed to install, operateand maintain an elevated skyride on City of San Antonioownedproperty within Urban Renewal Civfc Center Project No. 

### 5, during the exposition known as HemisFair 

### 1968,and for a period of years thereafter. (See copy of contract attached hereto). 'Constructionwas at the expense of HemphillMcCombs and ownership remained in HemphillMcCombs until it was completed and accepted by the City of San Antonio upon delivery of a Bill of Sale, dated 29 May, 

### 1968. Since said conveyance to the City of SanAntonio, the skyridehas been operated by Concessionaire. "CharlesG. Davis, Tax Assessor-Collector for Bexar County, has assessed the property and establishedan account on the tax rolls for the taxation of the Skyrideproperty as a leasehold interest in public lands in accordance with Articles 

### 7145,7143,and 

### 7174, Vernon'sAnnotated Texas Statutes. The leasehold interest is not presently taxed by the City or School District.
"Acontrary vfew that has been expressed is that the property, being wholly owned by the City of San Antonio, is exempt, and further, that it is not taxable to Hemphill-McCombs or Concessionaireunder Article 

### 71739V,A.T.S., for the reason that it is befng operated under a mere operatingagreement 05 license as distinguished from a leasehold. The general distinctionbetween a lease and a license is:
"A lease is a grant of an estate in land for a lfmited term with conditionsattached, and it createsboth privity of estate and privity of contractbetween the parties. The relatfon of landlord and tenant is createdwhere the owner of land consents to the occupancy thereof by another and the occupantholds in recognition of, or subordinationto the title of the owner. " 

### 35Tex.Jur.2d 

### 464-485,Landlord and ;enallt,

Sec. 1. (Emphasisadded.)

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### 3 (M-.676)

. . . in the law of real property a license is a privilege or authority given mined by one to do someparticular act or series of acts upon the land of another,but which~doesnot amount to an estate or interest in the land itself." 

### 36Tex.Jur.2d 

### 587-588,License, Sec. 1. (Emphasisadded.)

that ".

Our Supreme Court has recently reiterated thenprincipal

. . ordinarily licenses are revocable; Eagle Rock Ranch, 

### 364S.W.2d 

### 196, 203 (Tex.Sup.'1465);%%-&d been declared in the early case of Merriwether v. Dixon, 

### 28 Tex. 15, 18 (1866).

In thencase of Priddy v. Green, 220 S.W. 243 (Tex.Civ. ADV. 1920, no writ), involvina the construction of an oil and gas lease-for a primary term of five years and as long thereafter as oil or gas is produced from the land, the Court said, in part:
"Wethink the instrument evidences~more

than a mere license to go uvon the land. A mere license is a personal privilege to do some act on the land without passg t",t% y estate therein. The conveyance

licensee or licenserwould revoke t.
. . . - (atp. 248) ( Emphasis added.) The contract in questionunequivocally conveys to the named installers and operators of the concession the exclusive use and control of an area defined therein for the Iti tion and maintenance of such concession,referred to":: 'S?yzide" P for definite,primaryand secondary terms from 1968 conti&ously through October 31, 1983, at a stated consideration passing from such installersand operators to the City, as owner of the concession and land upon which it is situated. The consideration is based upon the annual gross receipts gleaned from patronage by the public of such concession during the life of the contract. Also, such contract specificallyuses the term "leaseholdimprovements"wherein the concessionaire is required to procure and maintain fire and extended coverage insurance on the improvements.

We point out that a conveyanceby the City of its freehold interest in the property involvedwouldnot, in any way,

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### (‘M- 676)

affect the leasehold interest of such named installersand operators or otherwise restrict their rights and obligations under such contract. The contractby its express terms prohibits said installers and operators from assigning, transferring, conveying~or otherwise disposingof the contract or any portion thereofwithout permission of the City. Therefore, under the terms of such contract, the operation of the concession in question cannotbe a mere ersonalprivilege revocable by a conveyance of either party's nterest therein, as would be true in the case of a mere license to do some act on the land without passing~any estate therein. Settegast v. Foley Bros. Dry Goods Co., 114 Tex. 4.52,270 S.W. 1014 (1925);=?@ R. I. & G. Ry. Co. v. Johnson, 

### 156 S.W. 253, 

### 256 (Tex.Cv.App. 

### 11913, error ref.), and Pridd v. Green,:supra;Hancock v. Bradshaw, 

### 350S.W.2d 95vTex.Civ.m 

### 1.961, no writ). A lease confersmore comprehensiverights than does a license. Texas Pacific Coal & Oil Co. v. Fox, 

### 228 S.W. 1021 (Tex.Civ. App. 1921, no writ).

It seems clear that the instrument in question granted a leasehold interest in property for a term of more than three years which Is taxable as the property of the installersand operatorsunder the terms and provisions of Article 7173, Vernon's Civil Statutes,which provides in itsportion which is applicablehere, as follows:

'Propertyheld under a lease for a term of three years or more, or held under a contract for the purchase thereof, belonging to this State, or that is exemptby law from taxation in the hands of the owner thereof, shallbe considered for all the vurvoses of taxation, as the property of theperson so holding the same, except as otherwise speciallyprovided bylaw.

. . ." (Emphasisadded.)
For related questions involving the scope and applicabilit of Articles 7173 and 7174,we referyou to our OpinionM-319 (196 5), a copy of which is in yourpossession.
SUMMARY The contract in question,which granted a leasehold interest in property for more than

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HonorableTed Butler, Page 

### 5 (M-676)

three years, conveyed a leasehold estate in the elevated skyrideproperty, which is taxableunder Article 

### 7173

Prepared by R. L. Lattlmore Assistant Attorney General
APPROVED: OPINION COMMITTEE
Kerns Taylor3 Chairman W. E. Allen,.-Co-Chairman Harriet Burke Howard Fender RolandAllen Rex White
MEADE F. GRIFFIN Staff Legal Assistant
ALFRED WALKER ExecutiveAssistant
NOLA WHITE First Assistant

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